“Take a deep breath and enter your PIN,” joked the cashier, as I handed over £4,750 for my season ticket.
Every commuter dreads the moment they have to cough up for a year’s travel in one fell swoop – and when you’re travelling a mere 30-odd miles from Essex to London, the best part of five grand seems pretty steep. But this time, thanks to a spot of season ticket stoozing, I’ve found a way to make paying for my train ticket pay…
What is season ticket stoozing?
Put simply, ‘stoozing’ is the art of making money by earning interest on cash that credit card providers lend you at 0% (see our Stoozing guide for full info). Season ticket stoozing’s a variation on that – the idea is you pay for your season ticket on a 0% credit card, then pop your season ticket loan into a high interest account, where it sits and earns a nice little bonus for you over the year.
Crucially, this WON’T work if your employer gives you your season ticket loan as a cheque made out to the train company – instead, you need it to pay you the money directly.
For many, though, that shouldn’t be a problem. The Rail Delivery Group, which represents train companies, says overall just 10% of annual season tickets were paid for by cheque in the last financial year.
However, stoozing isn’t for everyone – see what to watch out for below and if you have existing credit card debts or a poor credit score, this isn’t for you.
How I’m doing it
I started prepping for this trick about a month before my season ticket was up for renewal.
- For the credit card: Depending on the price of your season ticket, it can be hard to get a big-enough balance on a brand new 0% card. So instead I asked my current card provider for a second credit card with a 0% purchase deal lasting at least 13 months, then transferred some of my credit limit from the first to the second card.
- For the bank account: I’m putting £2,000 into the TSB Classic Plus where it should earn 5%, equating to £100 over the year. (I have to pay in at least £500 per month – I’ve set up a standing order to move this in and out of the account – and opt for paperless banking to get the interest.) I’ll then gradually put a further £2,225 into a regular saver linked to my HSBC Advance current account to earn 6% each month.
The remaining £525 will be used to pay off the minimum credit card payments – £45/mth for the first 11 months, and then I’ll clear the balance in the last month.
All in all I should make £170 over the year… which makes handing over the £4,750 slightly less painful.
How you can do it too
The amount you can earn from stoozing your season ticket loan depends on the size of your loan and the interest rate you manage to get. But on the average season ticket costing around £2,450 you’re likely to make at least £100 – it could be closer to £200 for more costly tickets. Here’s how:
- Get the right 0% credit card. You’ll need a big-enough balance to cover your loan. We’ve top picks in our Best 0% Credit Cards guide – just applying for a card will mark your credit file though, so use our eligibility calculator to see your odds of acceptance first.
- Get the right interest-paying bank account(s). The best option for you depends on how much you’re stoozing and how much hassle you want. See Top Savings Accounts for options.
- Pay for your season ticket with the credit card, and put the money in the bank. Then set up your direct debits to pay the minimum credit card payment, and for any regular saver accounts you’re using.
What to watch out for – check your employer allows it and be financially disciplined
We asked HMRC about the rules on this, and it told us: “The tax treatment of loans to employees from their employers does not depend on the purpose of the loan. Any restrictions on how the loan should be used are a matter for the employer.”
I couldn’t find anything in the small print of my season ticket loan telling me I wasn’t able to stooze – and after all this trick is still about buying a season ticket, you’re just doing it via a credit card instead. But it’s important you check the terms and conditions of your loan to be sure it’s allowed, and if in any doubt ask your employer – I asked our HR department and they said it wasn’t a problem.
Here are the other main things it’s worth watching out for:
- ALWAYS make the minimum repayment on your 0% credit card by setting up a direct debit.
- Don’t exceed the credit limit on your card as you’ll lose the 0% deal.
- Beware of the possible impact on your credit score. Stoozing involves having a large amount outstanding on a credit card and while this is unlikely to be a problem long-term, it may be if you’re planning to make an important credit application, eg, for a mortgage, within the next six months.
- Ensure you fully understand when the interest will be paid on each account and what criteria you must fill to get it (eg, setting up direct debits).
- Whatever you do, DON’T be tempted to spend the season ticket loan while it’s sitting in your bank account – remember you’ll need it to pay off the credit card.
- Some of the interest rates mentioned are currently “under review” so keep checking to see if they drop, and if you need to, swap to a higher interest account.
Season ticket under £2,000ish? Cashback and charge cards may beat stoozing
The alternative to season ticket stoozing is to pay for your season ticket on a cashback or charge card rather than a 0% credit card.
Using one of these cards, which give you cashback in the form of money or vouchers, means you avoid the faff of opening interest-paying accounts and having to transfer money, and there’s no risk of being hit by interest rate cuts. Plus, in some cases you get paid faster too – with the Amex Gold card below you usually get the vouchers within a month of buying your ticket.
Two of the top options are:
- Amex Platinum Everyday – Gives 5% interest on up to £2,000 spent in the first three months. However, you need to spend at least £3,000 across the whole year to get any interest (it’s paid annually). Repay IN FULL every month or you’ll pay 22.9% representative APR.
- Amex Gold – Spend £2,000 within the first three months of having it and you get 20,000 bonus points, worth about £100 in vouchers at stores such as Amazon, M&S and Homebase, and there’s no need to spend anything further on it. It usually has an annual fee, but this is waived for the first year – diarise to cancel it before year two starts. As this is a charge card you’ve no option but to pay it off IN FULL each month.
See our Cashback Credit Cards guide for more on how these cards work and the golden rules to remember.
Which you’ll make more from though depends on how much your season ticket costs. Here are some rough examples (we’ve based these on just one set of circumstances so make sure you work out the best way for you):
Can cashback or charge cards beat stoozing?
|Season ticket loan
|Cashback via Amex Platinum Everyday1
|Vouchers via Amex Gold2
|Amount earned stoozing via top bank account3
|1,000 pts worth £5 in vchs
|22,000 pts worth £110 in vchs
|23,000 pts worth £115 in vchs
|24,000 pts worth £120 in vchs
|Interest worked out for 12 months. (1) Must spend £3k per year so any spending above season ticket amount was worked out at 0.5% cashback rate. (2) Can claim cashback at lower rate of £4.50 per 1,000 points. (3) 5% interest using TSB Classic Plus, or using both TSB Classic Plus and Nationwide Flex Direct for amounts over £2k.
In my case I found I could earn £70-£90 more opting for stoozing, but as the table above shows, the lower the price of your season ticket, the more appealing cashback becomes as an alternative.